One of the challenges that many business owners face is being able to attract, retain, and motivate enough high-quality employees to keep the business going and growing. This is true of the automotive industry as well, but I don't agree with those who overstate the so-called "technician shortage" in our industry.

I think there are enough people in the workforce who are interested in becoming automotive technicians (or mechanics), but there is insufficient work being done by shop owners to attract, train, reward, and retain them. If you consider the sheer number of "graduates" being pumped out of some of the profit-driven tech schools these days, you would be hard pressed to believe there was a "technician shortage".

I think what we have instead is a shortage of good recruiting practices, good behavioral interviewing skills, and properly structured pay plans to make these graduates want to dedicate their careers to our industry once they finish school. There are too many shops using the backward philosophy of "quick-to-hire and slow-to-fire" instead of the correct philosophy of "slow-to-hire and quick-to-fire".

What I mean is, a shop owner or manager should take the time to conduct a thorough search for a candidate to fill a vacancy and then do a comprehensive behavioral interview and maybe even a test-drive before making the hiring decision. Consideration must be given not only to the technical skills or training a candidate has, but also to the candidates personality and the likelihood that he or she will be a good fit with the rest of the team. The worst thing that we are sometimes guilty of in this industry is being too quick to hire any warm body with a set of wrenches only to discover after a couple of weeks that they are like a cancer beginning to infect the once healthy organism that was our business.

Once a hiring decision has been made, the shop owner should have a clearly defined on-boarding process that includes orientation, training, buddy-shadowing, a complete benefits explanation meeting and an outline of what the ongoing training and evaluation program will be like. The new hire should also be given a cell phone number for either the owner or manager so that any questions he or she has can be answered quickly during this important time.

When it becomes obvious that we have made a good hiring decision, the work of retention and motivation begins. Automobile technicians need to know that they are valuable contributors to the overall business and this can be done by making sure that everyone understands exactly how his or her contribution impacts the company. I'm a big proponent of open-book management to as great an extent as the owner can bring him or her self to allow. Frequent feedback on performance is also critical not just in the early stages but throughout the employment relationship. Far too often we let good employees feel abandoned and unimportant because we don't share regular feedback - both bad and good - with them. A regular schedule of performance appraisals is good, but it's even better when coupled with a team meeting rhythm that includes weekly huddles and monthly goal review meetings.

As a business coach that specializes in automotive businesses, one of the most common issues I address is profitability. Profitable shops want to be more profitable and obviously those who are running in the red month after month want to be in the black. Recently one shop owner asked me "Is it possible to make a million dollars in this business?" before I could answer, he went on to ask "Heck, is it possible to make money in this business PERIOD?"

Good news. It's not only possible to make a million dollars in auto repair, it's common. In the world of business, everything has a formula and anything that has a formula can have a plan. Making money in auto repair is no different. So, you want to know how to make $1,000,000 from your auto repair business? Here you go:

Step one: Know your break-even number. You'd be amazed at how many shop owners and other business owners don't even know what they need to do just to break even. The simple formula for break-even is BE=FC/GP% or break-even equals fixed costs divided by gross profit percentage. For example, if my shops fixed costs (rent, utilities, non-production staff salaries, etc.) amount to $45,000 per month, and my gross profit percentage (total sales less cost of sales divided by sales) is say 60% overall, then I need to divide $45,000 by 60% to know my break-even point. 45000/0.6=75000. My break-even is $75,000 in sales. If my monthly sales are always at break-even; guess what? I will never make any money in this business!

The best shops can make a 20% net profit on sales, so the new formula should be NP20=FC/(GP%-20). For example, in the same scenario as above; my fixed costs are $45,000 per month, and my gross profit percentage is 60%, what do I need to sell in order to have a 20% Net Profit each month? 45000/0.4=112500. My new sales number to achieve a Net Profit of 20% is $112,500 per month. 

Incidentally, If I am selling $112,500 per month in auto repair at a 20% net profit, then I am earning $270K per year in EARNINGS FROM OPERATIONS also known variously as DISCRETIONARY CASH FLOW or NET PROFIT or THE MONEY I MADE FOR MY BUSINESS. :-) 

At the above rate, you will make a million dollars in auto repair after just about four years. Not bad! Now, I'm sure you're asking how to sell $112,500 per month at a 20% Net Profit in your auto repair business. All I have room for here is the short answer: Hire the Automotive Business Coach!

Most economists and pundits now agree; we are either in a recession or on the edge of one and surely everyone agrees that the economy has slowed down a great deal. While this slowdown has been largely initiated by the housing market, nearly all other markets have felt the impact and that includes auto repair shops.

The question for shop owners is this: "How will the recession impact my business?" The answer I will give might surprise you. I suggest that the impact of the recession on your business will be in direct proportion and gravity to the way you have developed your business in the past, and the way that you choose to respond (not react) to the slowdown in the overall economy.

Think about it; those who hang their heads and wring their hands when car counts drop and people aren't spending as much money never seem to get ahead or make substantial gains even in the good times. But those shop owners who look for the opportunities during times of economic uncertainty and are prepared to act with bold decisiveness can deal knockout blows to the competition during such times.

The visionary auto repair shop owner can see a recession or economic downturn for what it is; a blessing in disguise. An opportunity to reevaluate his operation and make even more improvements. A chance to strengthen bonds with long time customers and to market aggressively to new prospects when other shops are tightening their purse strings and suspending their marketing campaigns.

The shop owner who has vision for the future and the right attitude coupled with a basic understanding of business and economics will use this time to put some distance between his business and the competition by aggressively marketing and displaying confidence and professionalism in the marketplace. The visionary shop owner will actually increase his revenue AND his profits during times of economic downturn by launching new, bold strategic initiatives that will make him stand out from those weaker business owners who hope to "ride the storm out" and whose only aspiration is not to go broke during the recession. I guess you could say the big difference is the average shop owner "hopes it doesn't get too bad" and expects things to happen TO him, while the visionary shop owner launches into action to make his business stronger and controls what happens FOR him.

The visionary auto shop owner will be able to spin an economic downturn or recession into gold for his business and will come out the other end - whenever that may be - in a much better position to dominate his market.

If you want to know more, contact the automotive business coach.

Welcome. This is the first post for the new automotive business blog from AutomotiveBusinessCoach.com. I plan to write articles that will be useful and interesting to people who own, manage, or work in automotive businesses such as auto repair shops, body shops, truck and trailer repair, automotive transporting, new and used car dealerships, car washes, detail shops, stereo shops and other accessory shops, and really any other automotive related business. The first real post will be put up this weekend, and who knows how often they will come after that. Check back often.